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Economic Growth, Really?

Posted on Thursday, February 14, 2013

Believe it or not, we are beginning to see some new business opportunities for the bank based on growth and expansion. Many of our clients are in better shape than two years ago, and some seem very busy. Most people are saying that things are slowly improving. I even saw a "help wanted" sign the other day at a convenience store, a sure sign of an improving economy!

Aside from these anecdotal indications, a group of our senior officers and directors attended an economic summit in Harrisburg this week, featuring presentations on the economy by renowned economist Dr. Mark Zandi, another on the status of the state’s infrastructure, and a presentation by Governor Corbett, mostly about the proposed budget. The economic forecast was optimistic, with most sectors of the American economy in good shape, with businesses holding lots of equity and cash and enjoying good margins. It was noted that a lot of things could go wrong in the world, such as war in the Middle East, nuclear testing by certain countries, natural disasters at unprecedented levels, etc. Lots to worry about so thank goodness he did not bring up the possibility of the earth being hit by an asteroid, but overall it was a fairly rosy forecast, founded in his belief that the housing market is gaining momentum and will gradually improve. It was noted that this recovery is the first in history that was not led by the housing industry; a by-product of the collapse in the housing industry that knocked the economy for such a loop in the first place.

But demand for housing is here and growing, since a growing population can create 1.5 to 2 million new households a year. I also thought it interesting to consider the delay in household formation created by changing attitudes and the economy. He was trying to be funny, but the speaker pointed out that when a college graduate is finally able to find a decent job, he moves out of his parents’ basement and another household is created, thus stimulating the demand in that Economic